HOW DO I BUDGET FOR SCHOOL FEES?
Q Children’s education has become quite costly of late. Can you advise how, as parents, we can budget for our children’s tuition fees? What saving options do we have?
A Indeed, as a parent, you always aspire to give your children the best, particularly when it comes to education.
School fees differ in the UAE depending on the school and curriculum provided. There could also be an annual increase of tuition fees based on parameters and ratings set by governing bodies of education in the various emirates. So, one of the first things you would need to do is start forecasting ahead for your child’s education costs. This will reduce your worry at a later stage when your child starts higher education.
Ideally, your forecasting would depend on your monthly household income and, accordingly, you can prepare your expense sheet. Since education is part of the monthly outflow, we need to allocate funds. However, as many schools have quarterly payments we can save these funds into a short-term investment plan.
Secondly, several banks offer zero per cent tuition fee plans for six to 12 months when payment is made by credit card. Some offer a percentage of cash back on tuition fees if payment is made by credit card. Choosing such options could ease the stress of quarterly payment fees.
Overheads for higher education have been cumulative at a rate of over five per cent a year; therefore you need to have an education fund that may help tailor your financial commitments associated with university needs.
I must stress that financial discipline is essential and how you plan those savings is imperative.
In the UAE, most banks provide education finance – subject to certain terms and conditions – either to pay for primary and secondary education or university studies.
It’s always advisable to invest into a savings vehicle such as National Bonds or into low-risk mutual funds.
You can opt for investmentlinked insurance cover to allow necessary access to your funds in a structured way, which also would ensure your child’s future education in case of the death of the breadwinner.
Investment into equities or low-risk exchange traded funds can also be a part of your child’s education planning.
Do proper research – as financial planning for a child’s education is about designing a long-term approach for your family.
When finances stay in order it gives you peace of mind that plans are on track and it will help shape your child’s future.
If necessary speak to a financial adviser about creating a competent financial plan to help to meet education costs.
DHIREN GUPTA managing director of 4C Mortgage Consultancy, is a financial expert